By Cole Gee | Staff Writer
Recent tariffs imposed by the Trump Administration have lead to decreased traffic to American ports and docks. As a possible recession looms over the economy, many experts predict empty shelves and higher prices could soon be on the way.
In response, businesses across the country have begun to cancel orders and stock up on inventory. Many experts are now projecting to see empty shelves and higher prices on the rise sooner rather than later.
In response to the tariffs, China implemented a 125% tariff on American goods.
Associate professor in the Hankamer School of Business, Dr. Pedro Reyes, has a focus on global supply management. He believes both China and the U.S. will be forced to come to the negotiating table, as the current applied tariffs are unsustainable. When and where this negotiation will take place may be unknown, but Reyes said the U.S.’s current supply chain will soon take a major hit.
“We’re starting to see fewer containers and ports of entry,” Reyes said. “We’ll probably continue to see that decline. And so if the capacity demands, capacity utilization starts to go down, then other industries will be impacted by that.”
When capacity utilization goes down, it means an organization is not attempting to fully use its resources. While this includes equipment and facilities, the most common cut is labor, Reyes said.
“Yes, you can start seeing companies reduce the hours working,” Reyes said. “You might see — I wouldn’t say layoffs — but the need for the services coming down. So you’re not gonna need as many truck drivers to move the containers. But that will be shifted somewhere else. They’ll be displaced, but the drivers will still have jobs. It just won’t be there.”
Los Angeles is one of the country’s busiest and largest ports year-round. Eecently, reports have been released regarding the unusually low amount of inventory being shipped out during this time of year. Currently, the volume is as low as during Thanksgiving or Christmas, which is usually the lowest volume seen all year.
Reyes explained how in uncertain times like these, many companies have planned ordering inventory, known as “demand during lead time.” Inventory from China may take three to six months to get here, but companies already have enough inventory to last that time period before they run out, he said.
This summer, Americans may begin to see smaller and empty shelves as these companies’ inventory continues to dwindle. As the year continues into the fall, the inventory may have been canceled as the new prices due to tariffs have made it economically challenging to order inventory into the future, Reyes said.
Dr. Joshua Strakos is a business clinical associate professor and serves as a faculty mentor for Baylor’s supply chain management program. The closest economic situation he can compare these tariffs to is the COVID-19 pandemic. He said the pandemic could serve as a guide for the post-tariff economy and detailed how American supply chains might recover.
“We had ports and trucking bottlenecks after the supply chains opened back up from the initial gap that we saw in COVID,” Strakos said. “It’s like trying to fill a bucket with a small hose. It’s just gonna take time. You can only fit so much water through the hose at one time. What we saw after COVID was ships lined up at the ports waiting to unload and then truckers who couldn’t keep up with the demand.”
A report on the effect of COVID on the national supply chain conducted by the United States International Trade Commission found that in the first half of 2020, U.S. maritime container imports fell by 7% compared to the previous year. However, there was a surge in the second half of 2020, with containerized imports rising 9.5% and growing 16.4% year-over-year in the fourth quarter.
While some major industries have a guidebook on what recovery can look like post-tariffs, many consumers aren’t afforded the same luxury. Hannah Stolze, William E. Crenshaw chair of supply chain management, has her predictions. She said many consumers may have trouble affording any luxuries for the time being since tariffs and recessions in general tend to completely reset the market value and prices of products.
“Prices don’t ever go back down to the flat level of where they were before,” Stolze said. “Going into 2025, the carton of eggs was three bucks. We’re going to see even after the egg flu and all of that, they’re still going to be $3.25, even though they’re not $5, right? You don’t ever see prices go back down because once consumers have shown that they’ll pay a little bit more, of course, companies are going to take advantage of that.”
Stolze said tariffs are also impacting American exports like dairy, produce and pork, which are all major industries that rely on foreign demand. With the reciprocal tariffs in place, many companies are now sitting on a surplus of inventory with no customers to take them.
“I guess we’re all going to have to eat ham for the next year in the U.S. because that pork isn’t moving at a profitable price point right now,” Stolze said. “It’s not just what’s coming into the U.S., it’s what goes out of the U.S. that also supports our economy as well. So it’s not just our tariffs against others, it’s reciprocal tariffs against us that are gonna impact how our economy is shaped as well.”
